Prescription drugs are the most used benefit in Medicare. You don’t see a doctor every day or month, but you may take medications every day. Therefore, reductions in cost help many. However, when HOW those costs are reduced causes terrible effects on the rest of your benefits, negating savings in your plan to cover those costs, well, it shows the shortsightedness of planners. After all, if you are just moving money around, is it really a savings?

Many who make decisions for the masses, that they don’t have to live by, lack the understanding of market forces and economic principles. Their myopic views often cause unintended consequences that create more damage than the problem they tried to fix. That may be the case with the Inflation Reduction Act and Medicare Part D.

The Inflation Reduction Act of 2022

This Annual Enrollment Period (AEP), which starts on October 15^th and ends on December 7^th, will be one for the history books, as many changes are anticipated to cover costs forced on carriers (insurance companies).

The Inflation Reduction Act has mandated several things when it comes to Medicare Part D, the prescription drug plans (PDP) of Medicare, which affects standalone PDPs and Medicare Advantage plans with Part D:

1. No More Donut Hole in 2025: You will no longer absorb the full cost of your prescriptions while in the Donut Hole (albeit at 25% of the cost) to the tune of $2,970. This stage has been removed.
2. $2,000 Out of Pocket Maximum on Drugs: When someone spends $2,000 on medications during the Initial Coverage Stage (including any costs paid for you, like drug manufacturer programs for example), you will automatically go into the final stage of Catastrophic Coverage, where you will have no cost until the following year.
3. Medicare Shifted the Burden of Prescriptions to Insurance Companies: Medicare used to cover the majority of drug costs (80%) and insurance companies paid only 20%. Now they will mandate the insurance companies pay 60%, while they will only cover 20%. The remaining 20% will be paid by drug manufacturers.
4. They Quadrupled How Many Qualify for Catastrophic Coverage: By lowering the annual TrOOP (True Out of Pocket cost) from $8,000 to $2,000, they have quadrupled how many people will qualify for Catastrophic Coverage. This means that insurance companies not only have had their drug costs triple over night, but CMS, in essence, also then multiplied this amount by four (4).

While this sounds great to many, remember there is no such thing as a free lunch.

What Does This Mean for You?

Let me use an example that may help you understand the gravity of this change. Let’s say you are a family of four (4). Dad, Mom and two kids. Your family earns $5,000 a month or $60,000 annually. You budget 20% of your income for food – or $12,000 a year.

Suddenly, the government decides you MUST use 60% of your annual income to feed your family, and if you do not, they will take your kids!

Well, you have living expenses (rent or mortgage, utilities, cell phones, gasoline, auto and homeowners’ insurance, etc.). Your budget is pretty tight and you only save 10% a month, or $500. That equals $6,000 in savings a year, plus the original $12,000 already allocated for food, so you have a total of $18,000 you can use; but the government says you must spend $36,000. Where does the money come from?

So, you start trimming costs on entertainment, going out to eat, buying new clothes, trying to use fewer utilities, etc., but you can only save so much! You are feeling the pinch!

Then the government decides that on top of THAT, you will have to provide food for six (6) more homeless children, AND it must be the same amount spent on your family. NOW your food bill is $over $100K a year! Where will you find the money to meet this mandated obligation? Do you file for bankruptcy, sell you home and downsize, put your kids up for adoption – how do you find this additional money?

All Insurance Companies Are Facing This Dilemma

This is what’s happening to all insurance companies in the Medicare/Medicare Advantage space. No one is protected from this change, so you will see across the board changes from all major, regional and local carriers.

Aetna, the third largest Medicare Advantage plan on the market, owned by CVS, with a book of business of 3.2 million lives, is projecting they will lose approximately 10% of their clients. That’s 320K people who will need to find another solution. Humana is also predicting to shrink, and more will probably announce later.

What Might We Expect?

While no one knows yet exactly how this will affect current plans, you may see a combination of any of the following this AEP:

• Premiums for plans that previously didn’t have any.
• Deductibles in plans with no deductibles.
• Higher deductibles from plans with deductibles.
• Higher copays and maximum out of pocket limits.
• Lower ancillary benefits (dental, vision and hearing).
• Lower or no FLEX allowances.
• Lower or no over-the-counter allowances.
• Lower or no Part-B givebacks or credits.
• Food cards with lower balances.
• Certain costly prescriptions no longer covered in the formulary.
• Part D plans exercising the stage one deductible or applying deductibles to the lower, more costly tiers.
• And more.

What You Should Do

Due to all this commotion, expect to be bombarded by confusing and misleading TV and radio commercials, junk mail, email ad campaigns and Facebook, Instagram and TikTok advertising, all designed to scare you into contacting them. DO NOT DO THAT! The only thing that will happen is that you will keep second guessing yourself over one commercial versus another.

What you require is your own personal fiduciary agent who knows you, your needs and your area. A fiduciary works for you, period! He or she will be able to personally address your unique situation and ensure you get the best solution available for YOU in your area. NOTE: Captured agents are not ideal, since they work for one specific company (they don’t work for you) and cannot and would not look at other insurance companies to find what is truly best for your needs.

If you do not have your own personal fiduciary agent, find one who is highly recommended and reach out to him or her. Not all agents are equal, so you want one with a track record of servicing his or her clients and with tenure to ensure they are not learning the industry on your back.

YourCareRep is a fiduciary agent who is also a Registered Social Security Analyst organization. What this means is we consider everything when it comes to your benefits: Medicare, Social Security benefits, etc. We will be studying over 70+ plans from multiple carriers available in your area, and we will inform you of:

1. Changes to your existing plan for 2025
2. Any possible alternatives that would meet your needs and save you the most money.
3. Verifying your medications are still covered and none were dropped or moved to a more expensive tier.
4. Reverifying your doctor(s) have not left your network and still accepts your plan.

Therefore, if you need an agent, feel free to contact us at in**@*********ep.com, or on our website at https://yourcarerep.com.

Stay Tuned for Scheduled ZOOM and/or Local Meetings Held by YourCareRep and Eddie Velez

One thing we will be doing differently this year is holding meetings via ZOOM or in a local area where you can come learn what is happening and why, ask questions and get answers, and learn how we will ensure your benefits are protected.

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Finally, forward this article to any friends, family and associates you may have. Invite them to join you at the meetings and to subscribe to our newsletter. Be an advocate for everyone. After all, if we all stick together, we will make sure we are in the best position possible come January 1, 2025.